When you buy your First Homes scheme property, a restriction on its future resale will be registered on the title of the property by your conveyancer.
This means you can only sell to another qualifying First Homes buyer at the same percentage discount. This allows the First Home to continue benefiting others.
The selling process
The process for selling your First Homes property is broadly similar to the process for selling properties on the open market. However, there are some differences. We've set out the process below.
Tell us you're thinking of selling
You must first tell us that you wish to sell.
We'll give you instructions
We’ll issue you with instructions for marketing and confirming the eligibility requirements.
These must be used by your estate agent to ensure they can market to eligible buyers.
Our eligibility requirements at the time of sale apply and these may differ from the requirements that existed when you bought your property.
Instruct your estate agent
You should then instruct your estate agent and give them the eligibility requirements for their marketing.
If applicable, you must initially attempt to sell your First Home to buyers who meet any local connections criteria set by us.
If, after 3 months of active marketing through an estate agent, you are not able to sell your First Home, you must then attempt for a further 3 months to sell your property through an estate agent to buyers who meet the national criteria for buying First Homes.
Estate agent checks and valuation
Your estate agent will check potential buyers and complete an application pack for the new buyer.
The buyer would need to:
- meet all the eligibility criteria
- be able to make an offer (subject to their eligibility)
- be, in the estate agent’s professional judgement and advice to you, the most proceedable buyer.
You must then submit to us a valuation demonstrating the sale is at a discount to the prevailing market value.
The valuation must be from a valuer who is qualified by the Royal Institution of Chartered Surveyors (RICS). You must pay for this.
The RICS surveyor will value the home’s 100% market value before the First Homes discount percentage is applied.
The price of your First Home cannot be negotiated upwards from the discounted value set confirmed by your valuation.
You can reduce the price, for example if you wish to secure a quick sale, but the price may not be increased even if there are several potential buyers.
As with any privately owned home, the value of your First Home may increase or decrease over time. The same percentage discount must, however, always be applied on future sales. This means you will only gain or lose equity in relation to the value of the First Home after the percentage discount has been deducted.
We'll assess the application and valuation
We’ll consider your purchaser’s application and your valuation.
If eligible, we’ll approve the purchaser and issue instructions to their conveyancer. This similar to the process followed when you bought the First Home.
Your buyer’s conveyancer will then follow our instructions and the sale will proceed in the same way.
To ensure that other people can benefit from the discounted home, the same percentage reduction must be applied when you sell your First Home as was applied when you bought it.
If you cannot sell
If you are unable to sell your First Home to an eligible buyer after 6 months, you will need to notify us so that we can consider buying your home.
If we do not wish to buy your home, you’ll then be able to sell it on the open market at the open market price. The discounted portion of the sales receipts would then be returned us.
In this situation, a further Stamp Duty return to HMRC will be needed dating back to your original purchase. This is because the repayment to us becomes in effect a part of the original sale price for Stamp Duty purposes. However, the repayment to us is net of any additional Stamp Duty incurred. In other words, any additional Stamp Duty payable would be deducted from the amount that you are asked to return to us. This means you would not have to pay back any more than the discounted value of the home. Should this situation arise, you should seek advice from your conveyancer.
Hardship
If having to market the First Home for 6 months is likely to cause you hardship, such as bankruptcy, you can ask us to switch the property to an open market home. The decision on this is at our discretion.
In such cases, the discounted portion of the sales receipts would need to be returned to us, net of any Stamp Duty, as described above.